Corruption costs EU 120bn euros annually: report

NY Times News Service, PARIS

Despite its relatively clean image, the EU is losing at least 120 billion euros (US$162 billion) a year to corruption and more than three-quarters of citizens polled think that the problem is widespread in their countries, EU Commissioner for Home Affairs Cecilia Malmstrom said on Monday.

The awarding of government business and political party financing are two areas dogged by shady dealings, Malmstrom said at a news conference in Brussels, Belgium, adding that less obvious sectors also had problems, for example healthcare, where some patients are forced to pay under the table to obtain necessary treatments.

“Corruption undermines citizens’ confidence in democratic institutions and the rule of law; it hurts the European economy and deprives states of much-needed tax revenue,” Malmstrom said as she introduced a report on corruption by the European Commission.

She said there were “some indications that the crisis has boosted” corrupt practices at the local level, but that the commission did not have sufficient data to be certain.

The commission’s study found that 56 percent of Europeans polled believe that corruption has grown in their countries, a rise from the 47 percent recorded the last time such a study was conducted three years ago. In addition, more than four out of five Europeans surveyed believe that “too-close links between business and politics” are a major source of problems.

The report calls on member states to increase accountability and transparency, particularly in public procurement, which accounts for about 20 percent of the EU’s economy.

The report said that the ownership of bidders for public contracts is rarely checked and at least one country allows public contracts to be awarded to companies with anonymous shareholders.

Malmstrom did not point to any individual examples of corruption, but a PricewaterhouseCoopers study for the EU anti-fraud authorities last year described a case in which an unnamed government entity invited companies to bid on a contract to build two buildings.

The winning bid was 600,000 euros, even though other companies had offered to do the work for 400,000 euros. The corrupt bidding cost the government 50 percent more than it would have had to pay if one of the lower bidders had been awarded the contract.

The commission is seeking to encourage information-sharing among national governments and civic organizations in the hope that more openness will help the EU clean itself up.

Malmstrom said the commission’s estimate that corruption costs the EU 120 billion euros annually was almost certainly too conservative. The figure is equivalent to about 1 percent of the 11.7 trillion euro GDP of the 28-nation bloc. Malmstrom did not provide a breakdown of how officials had arrived at the 120 billion euro figure.

The commission is only the latest organization to point a finger at problems with corruption in Europe.

Transparency International, a nonprofit organization that monitors corporate and government corruption, said in a statement that the report was “an important step in the EU’s collective effort to scale up its anti-corruption efforts.”

However, it added that the commission had failed “to issue detailed recommendations in the area of whistleblowing, access to information and lobbying.”

Transparency International’s global corruption perceptions index shows that the EU contains some of the developed world’s most and least transparent governments.